Senate Bill S7651

                                 BILL NUMBER:  S7651

 TITLE OF BILL :

An act to amend the public service law, in relation to regulation of
municipal electric and gas corporations


 PURPOSE OF THE BILL :

This bill would reduce statutory requirements for review of major rate
applications filed by municipal gas corporations and municipal
electric corporations.

 SUMMARY OF PROVISIONS :

Section 1 of the bill would amend Public Service Law (PSL) § 66(12)(c)
to exempt municipal gas corporations and municipal electric
corporations from the requirements applicable to review of major rate
increases, including an evidentiary hearing and suspension of the
effective dates of the increases.

Section 2 of the bill would provide for an immediate effective date.

 EXISTING LAW :

              

The Public,Service Commission (Commission) exercises regulatory
authority over municipal gas corporations and over municipal electric
corporations that purchase less than their full power requirements
from the New York Power Authority (PAL § 1005 and § 1014) under Public
Service Law Article 4 and the General Municipal Law, or generate their
own electricity.  These corporations are required to comply with
requirements applicable to applications for a major rate increase
defined as an increase in aggregate revenues more than the greater of
$300,000 or 2.5% (PSL § 66(12)(c)). The requirements include an
evidentiary hearing and initial six month and extended four month
suspensions of the effective date of the rate change.

 LEGISLATIVE HISTORY :

This is new legislation.

 STATEMENT IN SUPPORT :
Each gas and electric corporation serving customers in New York State
is required to obtain Commission approval of a change in rates and
service terms and conditions contained in its schedule, or tariff.
The Commission conducts a review of each tariff change, including a
Department of Public Service (DPS) investigation and Commission order
approving, modifying, or rejecting the change, after compliance with
State Administrative Procedure Act requirements for publication of
notice and an opportunity for public comments, and, in certain cases,
newspaper publication.  For a major rate change publication of notice
in a newspaper is required in all cases, and the review also includes
an extended suspension period of the effective date of the rate
increase (up to 10 months) and an evidentiary hearing, including
submission of briefs. The Commission's order may be made following its
review of a recommended decision by an administrative law judge and
any party's objections to the recommended decision. The Commission
exercises jurisdiction over 39 municipal utility corporations: 2
municipal gas corporations and 37 municipal electric corporations.
Over the last 9 years, municipal utility corporations have filed about
40 rate increase applications; of these, 9 applications requested
major rate increases.

This bill would eliminate mandatory procedural requirements for major
rate increase applications filed by municipal corporations and allow
the Commission to require an evidentiary hearing and suspension of the
effective date, when necessary. DPS staff would investigate the rate
application, and the Commission would make a determination upon the
request. Although this investigation would not require a mandatory
hearing, other procedures would apply, including notice, opportunity
for comment, written testimony, interrogatories, and a written
Commission order. The reliance on written materials, without the
mandatory evidentiary hearing, would reduce expenses for municipal
corporations and their ratepayers.

A municipal corporation's involvement in a major rate proceeding and
the applicable due process procedures requires significant time and
resources. Elimination of mandatory evidentiary hearings for municipal
corporations would reduce expenses and allow the municipality to limit
its submissions to paper pleadings. The Commission would retain the
discretion to conduct a hearing, on its own initiative or upon request
of the municipal corporation. The costs incurred by municipal
corporations relating to major rate case proceedings are included in
the revenue requirement recovered from ratepayers. If the proceeding
is unnecessary and associated costs are not incurred, ratepayers would
benefit through rates from the reduced expenditures.

Further, to avoid the evidentiary hearing process and limit expenses,
some municipalities choose to file a rate application for an increase
under the level qualifying as a major rate increase, although the
level of increased expenses may justify a major rate increase. The
municipality is then compelled to submit additional rate increase
applications. The bill would provide these municipal corporations with
the flexibility to consider submitting an application based upon the
corporation's actual need, avoid the costs associated with more
frequent rate applications, and provide more rate stability for
ratepayers.

 BUDGET IMPLICATIONS :

Streamlining the rate case process for municipal gas corporations and
municipal electric corporations would allow the DPS to redirect
resources, estimated at one to 1.5 full time equivalent employees, to
other major policy and regulatory initiatives.

 EFFECTIVE DATE :
This bill would take effect immediately.